Perhaps excluding the likes of Amazon, Google, and Tesla, most well run, and effective businesses can achieve 10, 15, 20% or more sustainable improvement every couple of years by applying “Fresh Eyes” to their procedures and processes.

Your business is doing well, at least you think so. But you know it would do better if only you could just … [put your challenges and opportunities here] You say ‘I’ll jump on doing that next week, or after the vacation, or after Labor Day or by the end of the year.’ Sorry, buddy. Ain’t happenin’. You said the same last year and the year before and…

Let’s be honest you can’t see the opportunities and obstacles, and if you do, you cannot act on them. The excuses your staff and you have created to avoid doing what must be done have been internalized and are no longer even noticed. Processes that were in place and working have fallen by the wayside. You step over great opportunities sitting on your front step every morning, without even noticing them anymore or worse, curse them for being in your way.

We are blind to missed opportunities and obstacles because we are too close. In the past twenty-five years, I went from 175 to 200 pounds. I did not see even one of those pounds sneak up on me, but they are here today. Your business is the same, slowly getting fat, but not noticed.

‘Well, I’ll just have my staff take a look and make changes.’ Sorry, they have worse baggage than you.

What we’ve done at my company for many years now is to hire a temporary set of “Fresh Eyes.” This person must be a potential superstar, who is available to work for a couple of, or a few months. They are never hired to fill a current role.

Rather the “Fresh Eyes” position is to question everything we do. You know how it is easier to tell someone how they should run their business or their life than to do the same yourself. That is what we are looking for in a “Fresh Eyes” person.

Typically we hire people outside of the rental industry, so they have a different perspective than us. We’ve had a former Health Department inspector, a former Alderman, a couple of former community leaders, a former manager of a temp service. I lean towards people different than us, but who have proven themselves as leaders and producers.

The goal is to hit a sustainable 15% improvement with a two to four-month commitment to work with the “Fresh Eyes” employee.

To get value full value from this experience, you must remember that “Ego is the Enemy”* and do not allow yourself to feel insulted or defensive of your soon to be former bad ways.
——
*Ego is the Enemy is the title of a book on Stoicism by Ryan Holiday – It is worth the read. Find it on Amazon.

Ultimately, the goal is not simply to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).

But the ruling goes even further than is the worker dependent on the pay they receive from you. Below are a few paragraphs of the Department of Labor document worth noting.

If the work performed by a worker is integral to the employer’s business, it is more likely that the worker is economically dependent on the employer.

In sum, in order to inform the determination of whether the worker is in business for him or herself, this factor should not focus on the worker’s ability to work more hours, but rather on whether the worker exercises managerial skills and whether those skills affect the worker’s opportunity for both profit and loss.

The worker should make some investment (and therefore undertake at least some risk for a loss) in order for there to be an indication that he or she is an independent business.

For example, investing in tools and equipment is not necessarily a business investment or a capital expenditure that indicates that the worker is an independent contractor.

So if the guy is a licensed electrician doing work for dozens or hundreds of other owners – pretty much he is a contractor.

However if you are paying a painter $10 an hour, or even $20 for that matter, and he works primarily for you – he is an employee and you would be well served to consider making him a legitimate employee or hire out a company that uses employees.

Remember too that if someone working on your property is injured your rental property liability policy will not cover them. Either you or they need to have a worker comp policy. And this risk is even greater than the DOJ coming after you.

Here is a link to the State of Wisconsin’s guidance on the issue. Most owners I’ve met that call their workers contractors fail on four or more of the test outlined in the guide. Failing only one of the nine tests will cost you substantially. This is why we use employees exclusively, except for licensed trades like electricians.

Under section 102.07(8)1 of the Wisconsin Statutes, a person is required to meet a nine-part test before he or she is considered an independent contractor rather than an employee. A person is not an independent contractor for worker’s compensation purposes just because the person says they are, or because the contractor over them says so, or because they both say so, or even if other regulators (including the federal government and other state agencies) say so. The nine-part statutory test set forth under s. 102.07(8) of the Act, must be met before a person working under another person is considered not to be an employee. To be considered an independent contractor and not an employee, an individual must meet and maintain all nine of the following requirements:

1. Maintain a separate business.

2. Obtain a Federal Employer Identification number from the Federal Internal Revenue Service (IRS) or have filed business or self-employment income tax returns with the IRS based on the work or service in the previous year. (See note below.)

3. Operate under specific contracts.

4. Be responsible for operating expenses under the contracts.

5. Be responsible for satisfactory performance of the work under the contracts.

6. Be paid per contract, per job, by commission or by competitive bid.

7. Be subject to profit or loss in performing the work under the contracts.

8. Have recurring business liabilities and obligations.

9. Be in a position to succeed or fail if business expense exceeds income.

Note: When requesting a Federal Employer Identification Number (FEIN) from the IRS, you must inform the IRS that you are required by Wisconsin Worker’s Compensation law to obtain a FEIN. A social security number cannot be substituted for a FEIN and does not meet the legal burden of s. 102.07(8).

Of those ideas I have implemented .. not much. Shortly after the first of the year 2013 we found that my wife’s ongoing back pain was being caused by a large benign tumor. She had it surgically removed on Valentine’s day and is fine today, but it upended things for a while

Today as I reflect on the past year and think about this coming year I reread the ideas posted last year. A year later they all hold value.

The Association now has quarterly small group meetings as part of the Professional Membership. These meetings are an important element of #3 on the list, improving how we share our collective knowledge

In a big step towards #1 on the list, reducing maintenance supply costs, the Association has teamed up with Home Depot, Pittsburg Paint, Sherwin Williams, and a number of other organizations to provide discounts to our members.

Home Depot offers a whopping 20% discount on paint and 2% cash back rebate on most purchases to our members. Sherwin Williams offers members discounts on paint equal to the discounts that major contractors receive. Pittsburg has similar discounts.

I would add a sixth and seventh opportunity for 2014, Crowdsourcing/Crowd funding for real estate. I’ll post my thoughts on these in the next couple of days

The five most important Real Estate Ideas for 2014 remain:

(Clicking on the topic’s title takes you to the full article)

Reducing Maintenance Supplies costsPre 1950 buildings in lower income neighborhoods require around $100 per month per unit for repairs, replacement reserves and improvements. Newer buildings in more affluent neighborhoods perhaps $50 – $65. This is all maintenance from leaky faucets and unit turnovers to new cabinets, new roofs, electrical upgrades, replacing parking lots ect. (more)

I am about to hire someone to cut some trees around houses. I told him that I would like him sign something to knowledge that I will not be responsible of his personal injury from this job if it happens. What kind of form and where I can find it? and is it enough or something else I have to do to insure that I will be absolutely OK if his personal injury from work actually happens

It is not possible to have someone sign away their rights or your liability under Wisconsin worker comp laws. The only safe options are to have a minimum worker comp policy of your own or only hire companies that are insured.

Remember that a dwelling liability policy will not cover injuries to those working on the property. This is an area that a lot of owners of small multi families run into problems with when they assign a tenant to do lawn work or snow removal for a discount in rent.

There is really a great risk in not having the coverage or in hiring people without coverage. I had an employee that was making a minor repair to a small first floor porch overhang. He made a wrong move, fell and the worker comp carrier had to pay out $140,000. If we would have been uninsured that would have been me paying out the $140k, and probably more as insurers get discounts from the medical providers.

Disclaimer

I am "just a landlord," NOT an attorney or accountant. If you need legal advice, tax advice or have appendicitis, don’t rely on something you read on the internet and do it yourself. Rather, hire a competent professional.